PERSONAL INJURY CASES:
An “Offer of Judgment” is a litigation tool used when the “at fault” party’s insurance company is unwilling to offer reasonable compensation to settle your case. It is a statement filed with the Clerk of the Court saying you are willing to settle the case for a specified sum of money. The jury hearing your case is never told about the Offer of Judgment. If, after a trial, the jury awards you damages in an amount higher than the amount stated in your Offer of Judgment, you are also entitled to interest on the full amount awarded by the jury. This can be a significant additional amount of money. For many years, the interest rate had been 12%. In 2005, the Connecticut legislature lowered the interest rate to 8% for actions accruing after October 1, 2005. Although this is a significant reduction in the interest rate, an Offer of Judgment (renamed as an Offer of Compromise) remains an important litigation tool.
Making gifts of assets to children on a monthly basis has been a relatively conservative and well recognized asset protection strategy. In 2005, the Connecticut legislature provided that a transfer of assets as a gift that results in a Medicaid penalty period also creates a debt in favor of the State by the recipient of the gift. The amount of the debt can be no more than the amount gifted or the amount of Medical assistance eventually paid by the State on behalf of the person who made the gift. There also are pending federal law changes that will have a substantial impact on gifting as a Medicaid planning strategy. If you have implemented a Medicaid planning strategy that incorporates gifts, it may be advisable to review it.
WILLS, TRUSTS, and ESTATE PLANNING:
The Connecticut legislature repealed the Connecticut State Gift Tax and the Connecticut State Succession Tax, effective as of January 1, 2005. In their place, the legislature instituted the Connecticut Estate Tax. The Connecticut Estate Tax has an unlimited exemption for property passing between spouses. The exemption for property passing to children or other non–spouse beneficiaries is $2,000,000.00, in the aggregate. Although $2,000,000.00 is a lot of money, the taxable estate includes the proceeds of life insurance policies, equity in your home, all retirement benefits, and all non–excluded gifts made after January 1, 2005. If your net taxable estate exceeds $2,000,000, the Connecticut Estate Tax applies to the full amount, not just the excess.
REAL ESTATE TRANSACTIONS:
For many years, Connecticut residents selling real estate have been required to complete a Residential Property Condition Disclosure Report, The Report requires the Seller to answer questions about the condition of the home, the repair history of the home, and whether the seller has knowledge of problems with specific areas of the home. The law requires the Seller to deliver the Statement to the Buyer prior to the closing. The importance of reasonable accuracy and honesty in the content of the Report has been emphasized in several cases decided by the Connecticut Appellate Courts in 2005. In those cases, the Seller was held responsible for problems first discovered after the closing, in part, because of information known by the Seller and not disclosed on the Report.
In 2005, there were several Connecticut Appellate Court cases in which creditors attempted to impose personal liability on the owner of a business entity. In one case, the entity was a Stock Corporation. In another case, the entity was a Limited Liability Company. In both cases, the Court declined to hold the owner personally liable. In reaching its decisions, the Court emphasized the importance of respecting the independent integrity of the business entity. There should be no commingling of funds, documents should be signed in a representative capacity on behalf of the entity, and regular meetings of owners should occur and be recorded. Failure to follow the formalities creates a possibility of personal liability on the part of the owner.
In a series of cases involving police officers injured in automobile collisions with uninsured drivers, the Connecticut Appellate Courts have made it clear that a municipality that self insures for automobile liability purposes still must provide uninsured motorists’ coverage for its employees. However, the municipality is not required to provide more than the minimum amount required by state law which is only $20,000.00 per person and $40,000,00 per incident. In most instances, the police officer’s family uninsured motorist’s policy also will apply, and may provide an additional source of funds to cover the damages sustained in the collision.
INSURANCE COMPANY BAD FAITH:
All insurance policies require the insurance company to act in good faith. This is true whether the insurance policy is an automobile policy, health policy, disability policy, or life insurance policy. Connecticut also has a statute that defines certain insurance company behavior as an “unfair insurance practice.” Examples of statutory unfair insurance practices include false advertising, misrepresenting benefits available pursuant to a policy, and unfair claims settlement practices. Connecticut Appellate Court cases in 2005 continue to hold that if there is a pattern of similar unfair practices by the insurance company, such conduct may create an independent cause of action under Connecticut’s Unfair Trade Practices Act.
Very truly yours,
STEVEN P. FLOMAN